Valhi (VHI) Stock Forecast & Price Target

Valhi Inc is positioned for significant financial growth, with projected EBITDA rising at a 37% compound annual growth rate (CAGR) from $25 million in FY25 to $47 million in FY27, accompanied by an increase in margin from 24.2% to 30.1%, indicating strong operating leverage. The company's earnings per share (EPS) is expected to increase by 23% over the next 12 months, outperforming peers in the Canadian software consolidator sector, which are anticipated to see EPS growth of only 12% to 13%. This robust growth trajectory, particularly in the Chemicals segment, highlights Valhi's competitive advantage and financial health, contributing to a favorable outlook for the stock.

Valhi Inc's financial outlook is negatively impacted by a significant decline in revenue from its Attend Anywhere platform, which has fallen by 57% over the past two years, attributed to pricing pressures from a shift to usage-based pricing by the NHS and increasing competition from alternatives such as Microsoft Teams. The continued challenges facing NHS productivity, which remains 11% below pre-pandemic levels, further exacerbate the situation as it limits potential market growth and affects demand for related services. Additionally, projected EBITDA margins are expected to drop from 26.4% to 21.5% in the upcoming quarter before a forecasted recovery to 25%, indicating ongoing profitability concerns in the near term.